Someone in the Press says what I've been thinking all along...

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http://news.yahoo.com/s/usatoday/20080115/cm_usatoday/ourviewonmarketsinturmoilwallstreetfloodseconomyth endemandsabailout

Wall Street hasn't exactly warmed to Fed Chairman Ben Bernanke since he was appointed almost two years ago. At first, it found him too candid about inflation. Now it's grousing that he isn't properly signaling the Fed's intentions and, more important, is too timid in cutting interest rates. That's the view of a number of economists employed by, or at least sympathetic with, the Street's major investment houses.

This raises an important economic principle, best articulated, perhaps, in the New Testament book of Matthew: "Judge not, that ye be not judged."

Apart from the fact that the criticism is so utterly self-serving (of course banks want rate cuts, which translate into quick profits and boost the coin of the realm — stock prices), it serves to distract from Wall Street's culpability in creating this economic mess in the first place.

With the possible exception of $100-a-barrel oil, nothing is a bigger cause of Bernanke's enormously difficult task now than the behavior of Wall Street's leading companies over the past few years. With the fluidity of a Ford Pinto assembly line, they have been churning out some of the shoddiest products in the history of capitalism — bundles of toxic home loans, farcical debt ratings, and rosy assessments of virtually all leveraged buyouts.

These awful products — built on risk management decisions that were either negligent or willfully misleading — steered good capital into bad investments. They contributed heavily to the current havoc in the housing market and ruined the lives of some erstwhile homeowners. They squeezed credit markets and are prompting some investors worldwide to reconsider whether the USA is such a good bet. In other words they formed a perfect storm that rained on the parade that was once a vibrant economy.

This presents an enormous problem for Bernanke. He has had his hands full from the beginning with rising commodities prices, slowing advances in productivity, a weakening dollar and massive federal deficit spending — all of which raised the specter of inflation. Without these factors abating, the overall economy has taken a hit from declining home prices, rising foreclosures and a host of credit woes.

Now he has to act to resuscitate the economy — which will incidentally help bail out some of Wall Street's least deserving — without stoking inflation.

Maybe the Fed should have cut faster. Maybe it has some minor communications issues to work out. At this point, it's impossible to know whether the Fed has been too timid.

But Bernanke faces some of the most trying circumstances in decades. And maybe it isn't his job to accept blame for not being perfect in making up for the sins of others.

Frankly, the Fed's behavior is far less a problem than Wall Street's. In the past decade alone, a rotating cast of institutions has assisted Enron and others in hiding their fraudulent accounting, issued bogus "buy" recommendations on companies that happened to be lucrative banking clients, and papered the world with toxic debt. Call it the P.T. Barnum school of business: "There's a sucker born every minute."

Or to play on an old brokerage ad: When Wall Street talks, don't listen.